2009's winners and losers in the oil industry

The Iraqi oil auctions. (Getty Images)
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Saudi Basic Industries Corporation (SABIC)

The massive slump in both demand and price for petrochemicals products has meant that the region’s largest petrochemicals company has not enjoyed a great 2009 thus far.

The Saudi Arabian company posted a US$259.3 million loss for the first quarter of the year compared with profits of $1.84 billon for the same quarter in 2008 and also looks set to announce a 78% drop in Q2 profits compared to the corresponding period of 2008.

The main source of SABIC’s woes stems from the $11.6 billion purchase of GE Plastics in 2007. The company’s vice chairman and CEO Mohamed Al-Mady admitted earlier this year that the company had paid over the odds for the American petrochemicals giant.

This led to SABIC making a $315 million goodwill impairment charge earlier this year which led to the $259.3 million loss.

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To make matters worse the company recently become embroiled in an anti-dumping dispute with both China and India

However, the company is cutting costs and is still massively investing in projects designed to significantly increase capacity. So when the world lifts itself out of recession and demand for petrochemical products begins to rise, SABIC should be in a position to see 2009 as a stumble rather than a fall.